Ontario's Regulatory Registry

Proposal

Proposed amendments to the General regulation under the Consumer Protection Act, 2002 and to the General regulation under the Payday Loans Act, 2008.

Regulation Number(s):

Bill or Act:

Consumer Protection Act, 2002; Payday Loans Act, 2008

Summary of Decision:

The General Regulation (O. Reg. 98/09) under the Payday Loans Act, 2008 and the General Regulation (O. Reg. 17/05) under the Consumer Protection Act, 2002 have been amended with new requirements for payday lenders and cheque cashing service providers.

Payday Loans

Effective July 1, 2018:  It will be mandatory for payday lenders to provide borrowers with an extended payment plan if borrowers take out three or more loans with the same lender within a 63 day period. o Although borrowers would have to enter into the extended payment plan agreement, they would still be able to pay back any part of the loan at any time without any prepayment charge or penalty.  Payday lenders can only lend up to 50 per cent of a borrower's net pay per loan.  The cost of borrowing a payday loan must be disclosed as an annual percentage rate (APR) in advertisements and agreements.  The example loan amount in payday loan posters and advertising will change from $300 to $500.  Credit unions and caisses populaires will be exempt from the requirements of the Payday Loans Act, 2008 and its regulations.

Cheque Cashing Services

Effective July 1, 2018:

 The maximum fee for cashing government-issued cheques will be capped at $2 plus 1% of the face value of the cheque, or $10, whichever is less.  It will be mandatory for cheque cashing service providers to provide a receipt when cashing government-issued cheques.

This consultation paper proposes ways to strengthen protections for consumers using payday loans and other alternative financial services, including cheque cashing, rent-to-own, and instalment loans.

This consultation paper is divided into two sections. The first section includes proposed draft regulatory language focused on payday lending and cheque cashing services. Your input on the proposed regulatory changes will help inform decisions on whether and how those regulations should change.

The second section includes broader questions focused on instalment loans, rent-to-own, and disclosure-related elements of payday lending. Your input on these matters will inform the development of draft regulations, which will, in turn, be posted for public comment in a phase 2 consultation paper planned for fall 2017. It is proposed that the first phase of regulations would come into effect in early 2018 and the second phase in early 2019.

This consultation paper is one of several consultation papers that support the implementation of the Putting Consumers First Act (Consumer Protection Statute Law Amendment), 2017. That act, which received Royal Assent on April 13, 2017, addressed home inspections, door-to-door sales, debt collection, and alternative financial services, such as payday loans. Consultations on the other topics are underway or are planned.